Being Myself…

The Modi Model

// November 15th, 2009 // Contributed

Excerpt from an editorial in “The Hindu”

“Tomorrow the Prime Minister will inaugurate the World Economic Forum’s India Economic Summit. Lots of businessmen from all over the world will be present. They will listen attentively to him because they will be looking for ways to make money here by investing here. After all, India is the still the second fastest growing economy in the world after China.

But before investing they will want to be sure that India is safe and stable. The Prime Minister will surely convey this to them. And in a constitutional and electoral sense, India is indeed very stable. Elections are held, and governments come and go in an orderly fashion.

Global firms, however, tend to take a very long-term view of their investments and go beyond parliamentary majorities. So they also look for potential fault-lines that can become source of losses much later. India has several of these. Some are international and some are purely of our own making. About the former, India can do little than to bank on the US to help. But over the latter the Government has very substantial control.

Potential fault-lines

Broadly, these internal fault-lines fall in three categories – socio-economic, socio-political and those that lie on the tangent between the two. These last are the hardest to resolve as the Naxal problem shows. Paradoxically, foreigners are likely to trust the Government most on the third category as they, too, would see it largely as a law-and-order problem.

How the first two fault-lines are addressed by any Government depends in the final analysis on the political dividend it sees in the manner of addressing them. Thus, since there was a clear political gain to be had from putting more money into the pockets of farmers, UPA-I transferred close to Rs 500,000 crore and won the 2009 election.

This was partly done, as my colleague Harish Damodaran pointed out on Friday, by changing the terms of trade in favour of agriculture by raising the minimum support prices repeatedly between 2004 and 2008. In 2004, the MSP for wheat was Rs 640; now it is Rs 1,100. The same order of increase can be seen for paddy as well.

Thus, solutions to socio-economic problems reduce themselves eventually to money. The latest example of this is the Government decision to use disinvestment funds for the social sector. This was as announced on Thursday.

Social division

But it is the second category, the socio-political one, which is likely to worry foreigners most because it has very deep roots, which, moreover, are watered from time to time by the major and not so major upheavals. At the heart of this problem lies a religion-based social division which most Indians turn a blind eye to at the collective level, but which they nurture very assiduously at the individual level.

Or, as economists would say, this is a classic example where the maximization of individual utilities does not maximize social utility. One, therefore, hopes that when he speaks tomorrow, the Prime Minister will reassure foreign businessmen on this score.

What he needs to do (but won’t) is to tell the gathering that the Congress has adopted the Narendra Modi model of development because success anywhere is worth emulating. The Modi model consists, at its core, of ensuring that the Government works for the people and not against them.

The success of Gujarat today is the result of just this one thing. The Modi government does its best not to get in the way and ensures that the bureaucracy and service-delivery employees of the Gujarat government pay attention to all the small things that make a
difference to peoples’ lives.

Modi model

Thus, to give just one example, Mr Modi was told that cattle become more vulnerable to disease during the summer. So he has made sure that his veterinary department is not sitting in comfortable offices in the summer but is out in the countryside ensuring that the cattle are properly inoculated. There are hundreds of examples of this sort of thing that need replicating, instead of bleating that funds are needed and complaining that the delivery mechanism is inadequate or inefficient.

The Modi Model shows two other things. One is that success lies in ensuring that those who are being paid to do something do it and do it properly. How is it that Mr Modi is able to get the employees of his State government to work more efficiently and effectively than the other Chief Ministers are?

The third element in Mr Modi’s success is the reduction in the demands for speed money by the bureaucracy. Government employees (being what they are) probably do take bribes in Gujarat as well. But, from all accounts, the incidence is far less. Why?

An open acknowledgement from a Congress prime minister of a BJP chief minister’s success — and that too Narendra Modi — ought to happen. The Prime Minister is wise enough to understand that a WEF forum is not an election rally in Moradabad or Malda. The objective should be to send out the message to foreigners that, whatever be the differences in approach between the Congress and the BJP to social issues, when it comes to growth, the social fault-lines do not matter.

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